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1 1 (January 31, 2020)

handle is hein.crs/govbexy0001 and id is 1 raw text is: Section 232 Auto Investigation - mmm, go mppm qq\ , q I aS 11LIANJILiN, Updated January 31, 2020 On May 17, 2019, President Trump announced his Administration's determination that U.S. imports of automobiles and certain automotive parts threaten to impair U.S. national security. Under Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. §1862, as amended), this determination gives the President broad authority to respond to the threat, including potentially imposing unilateral import restrictions. Some analysts debate, however, whether the Administration's authority under this investigation has now expired, given statutory timelines for action. The President has instructed the U.S. Trade Representative (USTR) to negotiate agreements with Japan, the European Union (EU), and others, as needed, to address U.S. concerns. The Trump Administration initiated its investigation on auto imports on May 23, 2018 (83 FR 24735). The Department of Commerce (Commerce), which has statutory responsibility for such investigations, submitted its report to the President on February 17, 2019, but it has not been made public. According to the President, the report concluded that U.S. auto imports pose a national security threat because they affect American-owned producers' global competitiveness and research and development on which U.S. military superiority depends. The President's emphasis on U.S. ownership implies the Administration sees foreign-owned automakers operating in the United States as having fewer benefits to U.S. national security. Toyota and other Japanese-owned auto manufacturers objected to this view, noting significant U.S. investments. According to data from the Bureau of Economic Analysis, foreign firms have invested over $114 billion in the U.S. auto sector, directly employing 435,000 workers. The Section 232 investigation is a component of a broader Administration agenda related to U.S. trade and the auto industry, including: (1) expanding domestic auto manufacturing; (2) addressing bilateral trade deficits; and (3) reducing disparities in U.S. and trading partner tariff rates. At 2.5%, U.S. passenger auto tariffs are lower than some trading partners, including the EU, with auto tariffs of 10%. U.S. tariffs on light trucks, including pick-ups and sport utility vehicles, are much higher at 25%. Commerce received public comments and held a public hearing as it assessed the security threat raised by imported autos and parts. Labor union groups generally supported the investigation. The U.S. motor vehicle industry has voiced strong and united opposition to potential tariffs, and several Members of Congress have voiced concerns. ---- US...kt.. v v \ .S , Over the past 25 years, the global auto industry has almost doubled in size, driven by China's growth as a major auto producing and consuming nation, making and selling 25 million vehicles in 2019. General Motors sells more vehicles in China than in the United States. China's rise in vehicle and parts manufacturing has added a new, often inexpensive, source of parts that may compete with manufacturers in other countries. In 2018, more than 35 countries sold nearly $160 billion in auto parts in the United States. Since the North American Free Trade Agreement (NAFTA) went into force, U.S. production growth has been relatively steady, except during recessions, rising from 9.7 million vehicles in 1992 to 11.3 million in 2018. At the same time, production in South Korea and Mexico also increased, while decreasing in two other major auto-producing countries, Japan and Germany. Major distinguishing factors in the U.S. market during this time include: * an increase in the number of foreign-owned auto manufacturing plants in the United States from seven in 1992 to 18 in 2019; * the growth of Mexico as a source of vehicles for U.S. sales from 1 million per year when the NAFTA entered into force in 1994 to 4 million in 2018; * the doubling of U.S. vehicle exports in recent years to nearly 2 million units in 2018; and, * a change in the U.S. fleet composition with a growing U.S. consumer preference for light trucks over passenger cars: 69% of U.S. sales were light trucks in 2018, compared to 50% in 2012. (Some automakers are now discontinuing production of passenger cars.) Figure I. Origin of Vehicles sold in U.S. % of total U.S. ;gihtvehic0e sales fpassenger cars and light trucks) U.S.-made Imported 2 0 1 0 . ............ ... Source: CRS analysis based on Ward's Automotive Database, and U.S. International Trade Administration import data. U.S. vehicle sales are increasingly composed of imports (Figure 1), although more than half of imported vehicles were manufactured in Canada or Mexico with significant U.S. content, including engines, transmissions, and other components. Some assemblies, such as steering and braking systems, cross the border up to six times as plants throughout North America add components. More than half of U.S. imports from Canada and Mexico are produced by General Motors, Ford, and Fiat-Chrysler. K~:>

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